HR GLOSSARY · Compensation & payroll

13th-month salary

Also known as: Christmas bonus, 13th salary, aguinaldo, tredicesima

A 13th-month salary is an extra month's pay disbursed once a year (typically at year-end). In many EU and Latin American jurisdictions it's a legal obligation; in others it's a contractual or customary benefit that competitive employers offer to retain staff.

The 13th-month salary is one of the most misunderstood compensation concepts at hiring time. In Portugal, Spain, Italy, Brazil, Mexico, the Philippines and several others, it's mandatory by law — not paying it is a labor-code violation. In Germany, France, the UK, and most of North America, it's not mandatory but is commonly negotiated as part of the package, often as a Christmas / year-end bonus. The distinction matters because candidates from countries where it's mandatory often assume your offer includes it; candidates from countries where it isn't often assume the opposite. Always state it explicitly in the offer letter.

Mandatory vs. customary

Mandatory by law: Portugal, Spain, Italy, Greece, Brazil, Mexico, Argentina, Philippines, Indonesia, several others
Customary but not mandatory: Germany (Weihnachtsgeld), Austria, Switzerland — usually negotiated
Sometimes "14th-month" too: Spain, Portugal, Greece pay a second extra in summer (vacation bonus)
Not customary: UK, Ireland, Netherlands, US, Canada, Australia — replaced by discretionary year-end bonus

How it usually pays out

The mechanics vary: some jurisdictions split it across the year (one twelfth added to each monthly payslip), most pay it as a single lump in November or December. Some prorate by tenure in the calendar year (a hire on July 1 gets 6/12 of a 13th). When mandatory, the figure is usually 1/12 of annual base salary — variable pay, overtime, and bonuses typically don't count toward the calculation.

Tax treatment

In most countries the 13th-month is taxed as ordinary salary income — no special treatment. A few (e.g., Brazil) treat part of it as separately-taxed. Always check the local code or your payroll provider for the current handling; it changes more often than it should.

Frequently asked questions

Is 13th-month salary the same as a Christmas bonus?

In jurisdictions where 13th-month is mandatory, it's a legal entitlement, not a discretionary bonus. In jurisdictions where it isn't, the terms get used interchangeably — but the legal weight is very different.

When is 13th-month salary paid?

Typically in November or December, often timed before Christmas. Some employers split it across the year (one twelfth per month); some pay it in a single year-end lump.

Does 13th-month salary apply in Georgia?

No — Georgia has no statutory 13th-month obligation. Year-end bonuses, when paid, are discretionary and don't carry the same legal weight as in Portugal or Brazil.

Is 13th-month salary taxed?

In most jurisdictions, yes — as ordinary salary income. A handful treat part of it separately (e.g., Brazil splits it across two tax events). Check your local payroll provider for current handling.